"The July employment report was on balance disappointing, as
payroll jobs, income, and hours grew less than expected, and the
larger-than-expected decline in the unemployment rate was partly
due to declining participation,"
said Goldman Sachs' Jan Hatzius. "There continued to be
little if any discernible sequester impact on federal jobs as
federal ex-postal service employment was essentially unchanged
on the month. However, there was a bit more weakness in private
industries likely to be impacted by the sequester, including
non-auto transportation equipment manufacturing―which
incorporates aerospace and shipbuilding―down 7k."

Sure, the numbers were worst than expected. But in the big
scheme of things, they weren't exactly a disaster. "These data
are "Goldilocks"—Not too hot, not too cold...just about right,"
said UBS's Maury Harris. "All in, today’s data are probably
soft enough for markets to think about delayed Fed tapering (We
still expect announcement of Q4 taper announced at the
September FOMC meeting.), but not so soft as to generate much
real economic worry."

Regardless, the numbers continue to reflect a
jobs market that's anemic at best. "While the two political
parties are putting a different spin on the latest job report,
they should both internalize a simple message: the economy is
not strong enough to absorb another self-manufactured blow from
Congress – be it a renewed debt ceiling saga or a government
shutdown,"
said PIMCO's Mohamed El-Erian.

Just after noon today, St. Louis Fed President
James Bullard spoke and gave a presentation at the
Municipal Finance Conference in Boston, Massachusetts. "Should
the Committee focus attention primarily on nonfarm payrolls and
unemployment, or should the Committee consider a wider range of
labor market indicators?" asked Bullard. "If the former, then
labor markets have clearly improved since September 2012. If
the latter, then labor markets may be judged to remain weak,
but the criterion for labor market improvement would be
considerably muddied."